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AT&T: We Need Spectrum or Prices Are Going Up

By Brian X. Chen January 26, 2012 6:56 pmJanuary 26, 2012 6:56 pm

Alex Wong/Getty ImagesRandall Stephenson, chief executive of AT&T, testifying before a House subcommittee in May.

Smartphones and tablets are squeezing data networks. And because of the limited amount of the frequency spectrum available to expand wireless services, the nation may face a data network shortage in the coming years. AT&T thinks the government is the problem.

The nation’s No. 2 wireless carrier, after Verizon Wireless, isn’t happy that the Federal Communications Commission objected to its merger with T-Mobile. The company harshly criticized the governmental agency on Thursday for its strict regulations on spectrum. The F.C.C. disputes some of the carrier’s claims.

During AT&T’s quarterly earnings call Thursday, Randall Stephenson, the company’s chief executive, complained about the nationwide spectrum shortage and pointed fingers at the F.C.C. for being too slow with auctioning off spectrum.

“We pile more and more regulatory uncertainty on top of an industry that is the foundation for a lot of today’s innovation,” he said. “The end result of this is that we have an industry that is just really stuck in creating real capacity.”

Mr. Stephenson claimed that the F.C.C. had not held a significant spectrum auction since five years ago and that AT&T would instead have to resort to making smaller transactions on spectrum, which were also receiving “intense scrutiny” from the F.C.C.

He said that because AT&T needs more spectrum, without it the company will have to increase prices for customers and impose restrictions on data use to manage rising demands for data.

“In a capacity-constrained environment, we will manage usage-based data plans, increased pricing and managing the speeds of the highest volume users,” Mr. Stephenson said during the call. “These are all logical and necessary steps to manage utilization.”

The F.C.C. denied that it hadn’t done a big spectrum auction in five years and said it had approved over 300 commercial mobile transaction applications in the last two years. Last month, the F.C.C. approved AT&T’s acquisition of spectrum held by Qualcomm for $2 billion.

“Unfortunately, these facts were completely ignored in the conference call,” said the F.C.C. in a statement.

The agency said that the proposed AT&T and T-Mobile merger was “unprecedented on many levels.”

“The DOJ and FCC staffs concluded that this action would violate the antitrust laws and result in higher prices for consumers and less innovation and investment in the marketplace,” it said. “Those conclusions surely disappointed AT&T executives, but they followed directly from the facts and the law.”